Int'l Bhd. of Teamsters v. City of Monterey Park

• Decision Date: 07 January 2019
• Docket Number: B282971
• Citation: 30 Cal.App.5th 1105,242 Cal.Rptr.3d 231
• Parties: INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 848, et al., Plaintiffs and Appellants, v. CITY OF MONTEREY PARK, Defendant and Respondent; First Transit, Inc., Real Party in Interest and Respondent.
• Court: California Court of Appeals Court of Appeals

30 Cal.App.5th 1105

242 Cal.Rptr.3d 231

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 848, et al., Plaintiffs and Appellants,

v. CITY OF MONTEREY PARK, Defendant and Respondent;First Transit, Inc., Real Party in Interest and Respondent.

B282971

Court of Appeal, Second District, Division 7, California.

Filed January 7, 2019

Bush Gottlieb, David E. Ahdoot, Kirk M. Prestegard, Julie Gutman Dickinson and Ira L. Gottlieb, Glendale, for Plaintiffs and Appellants.

Reed Smith, Jesse L. Miller, James M. Neudecker and Dennis Peter Maio, San Francisco, for Defendant and Respondent and for Real Party in Interest and Respondent.

SEGAL, J.

INTRODUCTION

The City of Monterey Park contracts with private companies to operate its municipal bus system. The City conducted a bid on the contract and gave MV Transportation, the incumbent contractor, a preference under Labor Code section 1072,¹ which requires a public agency conducting a bid for a public transit service contract to give a 10-percent bidding preference to a contractor that, in its bid, agrees to retain the employees of the prior contractor for at least 90 days. The City also gave a 10-percent preference under section 1072 to First Transit, even though First Transit did not state in its bid it would retain the employees of MV Transportation for at least 90 days. The City awarded the contract to First Transit.

Three employees of MV Transportation and their union filed a petition for a writ of mandate and a complaint for declaratory relief, alleging the City breached its duty under section 1072 to award the bidding preference only to contractors who declare in their bids they will retain existing employees for at least 90 days. The trial court found there was no such duty under the statute, sustained the City's demurrer to the petition and complaint without leave to amend, and entered judgment in favor of the City.

This appeal raises the issue whether the words "shall declare as part of the bid" in section 1072, subdivision (a), mean the bidder must state in its bid whether it will retain the employees of the prior contractor for 90 days. It also raises the issue whether, if the public agency (or "awarding authority") gives the statutory preference to bidders who do not agree in their bids to retain the employees of the prior contractor for at least 90 days, a bidder who makes the commitment is really getting a statutory preference. We answer these questions yes and no, respectively, and reverse.

FACTUAL AND PROCEDURAL BACKGROUND

According to the allegations of the operative second amended petition for writ of mandate and complaint for declaratory relief, which on demurrer we accept as true ( Heckart v. A-1 Self Storage, Inc. (2018) 4 Cal.5th 749, 753, 231 Cal.Rptr.3d 459, 415 P.3d 286 ), International Brotherhood of Teamsters, Local 848, represented employees of MV Transportation, which operated the City's fixed-route bus system. Jose Baza, Ruth Villafuerte, and Isabel Martin were employed by MV Transportation as bus operators. When the City solicited new bids for the bus system contract, MV Transportation and First Transit were two of three bidders. MV Transportation stated in its bid it would retain existing employees for at least 90 days, and the City awarded MV Transportation a 10-percent bidding preference under section 1072. First Transit did not state in its bid whether it would retain existing employees for at least 90 days. The City nevertheless awarded First Transit a 10-percent bidding preference under section 1072.

International Brotherhood of Teamsters, Local 848, Baza, Villafuerte, and Martin (collectively, the Union) filed a petition for writ of mandate and complaint for declaratory relief against the City and First Transit. The Union alleged the City violated its mandatory duties under section 1072 when it awarded First Transit a 10-percent preference. The Union sought a peremptory writ of mandate ordering the City to rescind or set aside the contract with First Transit and to either issue a new request for bids or reevaluate the bids previously submitted. In its declaratory relief cause of action, the Union sought declarations that (1) compliance with section 1072 "requires a clear declaratory statement in any bid, which sets forth whether or not the bidder will retain the employees," and "a substantiated factual determination by the awarding authority that any bidder granted the [s]ection 1072 [p]reference has affirmatively declared in its bid that it agrees to retain the employees of the prior contractor for a period of not less than 90 days"; (2) because First Transit failed to comply with section 1072, subdivision (a), its proposal was void and First Transit was disqualified; and (3) because the City failed to comply with section 1072, subdivision (b), its contract with First Transit "shall be rescinded and without legal effect."

The City demurred, and the trial court sustained the demurrer without leave to amend. The court concluded the City had discretion to award the 10-percent bidding preference under section 1072 to a contractor who did not declare in the bid it would retain qualified existing employees for at least 90 days. The trial court ruled: "A bidder who fails to state in its bid that it will retain prior employees may nevertheless communicate to the City its willingness to retain some or all of the employees of the prior contractor or subcontractor. In such a situation, the City has discretion as to whether or not it will confer a 10 [percent] preference." The trial court entered judgment in favor of the City, and the Union timely appealed.

DISCUSSION

A. Standard of Review

"On review from an order sustaining a demurrer, ‘we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose.’ " ( Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, 105 Cal.Rptr.3d 181, 224 P.3d 920 ; see SJJC Aviation Services, LLC v. City of San Jose (2017) 12 Cal.App.5th 1043, 1051, 219 Cal.Rptr.3d 637 ["[w]e review the petition and complaint de novo ‘to determine whether it alleges facts stating a cause of action under any legal theory’ "]; Jones v. Omnitrans (2004) 125 Cal.App.4th 273, 277, 22 Cal.Rptr.3d 706 ["[o]n appeal from a dismissal entered after an order sustaining a demurrer to a petition for writ of mandate, we review the order de novo, determining independently whether the petition states a cause of action as a matter of law"].) "We deem to be true all material facts that were properly pled, as well as all facts that may be inferred from those expressly alleged." ( Jones, at p. 277, 22 Cal.Rptr.3d 706.) " ‘ "[I]t is error for a ... court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory." ’ " ( Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1201, 151 Cal.Rptr.3d 827, 292 P.3d 871 ; see SJJC Aviation Services , at p. 1051, 219 Cal.Rptr.3d 637 ["[o]ur review is governed by settled standards, which apply equally whether a demurrer challenges a complaint or a petition"]; Jones , at p. 277, 22 Cal.Rptr.3d 706 [demurrer to a petition for writ of mandate].)

B. The Bidding Preference Under Section 1072

Section 1072, subdivision (a), states: "A bidder shall declare as part of the bid for a service contract whether or not the bidder will retain the employees of the prior contractor or subcontractor for a period of not less than 90 days, as provided in this chapter, if awarded the service contract." Section 1072, subdivision (b), states: "An awarding authority letting a service contract out to bid shall give a 10-percent preference to any bidder who agrees to retain the employees of the prior contractor or subcontractor pursuant to subdivision (a)."² The successor contractor does not have to retain unqualified employees. ( § 1072, subd. (c)(2).) Section 1073 enforces these provisions by providing that an employee who is not offered employment or is discharged by a contractor who has agreed to retain employees for at least 90 days may file a civil action for reinstatement, back pay, and injunctive relief. An awarding agency may on its own motion, or upon request by a member of the public, terminate a service contract made pursuant to section 1072 if the contractor has substantially breached the contract. ( § 1074.)

The legislative history explains the reason for the bidding preference under section 1072. "[A]pproximately 30 percent of public transit service is provided by private companies who contract with local government agencies. Such contracts typically last for only a few years and when they are up for renewal, the contractor is typically underbid by a new contractor." (Sen. Com. on Labor and Industrial Relations, Analysis of Sen. Bill No. 158 (2003-2004 Reg. Sess.) as amended Mar. 24, 2003, pp. 1-2.) This "revolving door" in public contracting negatively impacts existing employees who are not retained by the new contractor and harms "the economic well-being of the state as such employees often have to rely on public services just to get by." (Sen. Rules Com., Off. of Sen. Floor Analyses, Analysis of Sen. Bill No. 158 (2003-2004 Reg. Sess.) as amended Apr. 2, 2003, pp. 3, 4.) To address the "significant economic dislocation" ( § 1070, subd. (a) ) of employees who are not retained and the resulting burden on government services and taxpayers ( § 1070, subd. (b) ), the Legislature established a bidding preference for contractors bidding on public transit service contracts who agree to retain qualified existing employees for at least 90 days. ( §§ 1070, subd. (c), 1072, subd. (b).) The legislation provides a measure of job security by giving retained employees 90 days to prove their worth to the new contractor or to seek other employment. (See Enrolled Bill Rep. on Sen. Bill No. 158 (2002-2003 Reg. Sess.) prepared for Governor Gray Davis...